Government begins consultation on freezing Auto Enrolment threshold

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Government begins consultation on freezing Auto Enrolment threshold

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Posted on: 16/10/2014

The government is looking at scrapping the link between the Auto Enrolment ‘trigger’ and the threshold at which workers begin paying income tax.

In a consultation published on Thursday, October 23, the Department for Work and Pensions (DWP) has outlined four alternatives for setting the trigger from the next tax year.

Since the introduction of Auto Enrolment in 2012, the level at which employees must be auto enrolled has effectively been linked to the income tax threshold, which currently stands at £10,000.

This was recommended by the ‘Making Automatic Enrolment Work’ review, but with the threshold set to rise to £10,500 next year the DWP is now looking at other options.

The proposals under consideration are:

  • increasing the trigger to £10,500
  • freezing it at the current level
  • linking it to inflation or earnings
  • using the Pension Commission benchmark replacement rate to set it.

The consultation is open until Tuesday, November 25.

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